Private Mortgages Ontario.
Approved on Equity,
Not Just Credit.

Equity-Based Lending for Complex Situations

A private mortgage in Ontario is a short-term loan secured against real estate, funded by private investors or Mortgage Investment Corporations (MICs) rather than chartered banks or institutional lenders. Unlike bank mortgages, which are governed by OSFI stress test rules and require verifiable income documentation, private mortgages are underwritten primarily on the property's value and the borrower's available equity.

This distinction matters for borrowers who have been declined at the institutional level. The approval criteria are fundamentally different — private lenders ask: What is the property worth? How much equity is available? What is the exit strategy? Rather than: What does line 150 say? What is the beacon score?

Common Reasons Borrowers Use Private Mortgages

• ✓ Bank or B-lender declined due to credit score, income documentation, or TDS/GDS ratio
• ✓ Self-employed income difficult to document under institutional standards
• ✓ Consumer proposal, bankruptcy discharge, or credit rebuilding period
• ✓ Power of sale notice received — need to fund and close urgently
• ✓ Bridge financing required between property transactions
• ✓ Renovation or construction financing on non-standard properties
• ✓ Equity takeout on a property that doesn't qualify for a HELOC or refinance
• ✓ Non-resident borrowers or foreign income situations

Private Mortgage Rates in Ontario

Private mortgage rates in Ontario typically range from 8% to 14% annually depending on: the loan-to-value ratio (LTV), property type and location, borrower credit profile, whether the mortgage is in 1st or 2nd position, and the specific private lender or MIC funding the deal.

How Private Mortgages Work: The Exit Strategy

A private mortgage is a tool — not a long-term solution. Most private mortgages in Ontario are structured for 1–2 year terms, with the expectation that the borrower uses that time to improve their credit profile, increase documented income, or stabilize their financial situation to qualify for institutional lending at renewal.

From day one, I build the exit strategy into the file. If your goal is to transition to a B-lender at renewal, we work backwards from that goal to identify exactly what needs to change during the private mortgage term. This is what distinguishes a professional broker from simply placing the first deal.

1st Position vs. 2nd Position Private Mortgages

A 1st position private mortgage sits ahead of all other claims on the title. These are typically used for purchases, refinances, or when the property carries no existing mortgage.

A 2nd position private mortgage sits behind an existing 1st mortgage. These are used for equity takeout when the borrower wants to keep their existing mortgage in place — avoiding breakage penalties and preserving favorable 1st mortgage terms. Second mortgages carry higher rates than 1st position mortgages, reflecting the additional risk to the 2nd position lender.

The Approval Process

Private mortgage approvals in Ontario move significantly faster than institutional approvals. The typical timeline from initial application to funding: